Environmental Group Claims Utility’s Plan is Unjust For Low-Income Customers
RICHMOND, Virginia– Yesterday, the Commonwealth of Virginia State Corporation Commission granted Sierra Club’s Motion to Participate as a Respondent in the Rappahannock Electric Cooperative (REC) general rate case. The Sierra Club’s Virginia Chapter opposes REC’s proposed rate restructuring that would drastically increase low-usage customers’ bills. REC is one of the nation’s largest rural electric cooperatives, with over 164,000 connections in portions of 22 Virginia counties. Earlier this year REC asked Virginia’s State Corporation Commission to approve drastic increases in the co-op’s monthly fixed access charge for residential and small commercial customers. Customers must pay that charge regardless of how much or little electricity they consume.
“REC’s unwarranted rate restructuring would reduce customers’ control over the size of their bills, and reduce incentives for energy efficiency and conservation,” Kate Addleson, Director of the Sierra Club Virginia Chapter, said. “That’s taking energy policy in exactly the wrong direction.”
Attorneys from the Sierra Club and the non-profit law firm Appalachian Mountain Advocates submitted expert testimony in an SCC filing from Melissa Whited of Synapse Energy Economics, Inc. explaining that REC’s proposal, if approved, would fundamentally alter the relationship between fixed monthly customer charges and electricity rates based on volume of electricity consumed. By collecting more of its revenue from fixed charges, REC would increase low-usage customers’ bills the most, disproportionately affecting low-income customers and customers who have invested in efficiency and solar. The effect would be “rate shock” for those customers, a term used to describe a sudden change in bill structure. Whited noted that rate shock violates a fundamental principle of utility rate design. Additionally, other commissions across the country are rejecting this approach of imposing higher fixed rate charges for customers.
The American Association of Retired Persons (AARP) has opposed rate-restructuring efforts like REC’s that increase fixed monthly charges, as have the NAACP, Consumers Union, and the National Consumer Law Center.
“REC’s move appears to be part of a broader nationwide effort promoted by industry front groups like the American Legislative Exchange Council (ALEC) to attack customer-owned solar,” Seth Heald, Sierra Club Virginia Chapter Chair, who is an REC customer/member, said. “Electric co-ops should be working with their customers to encourage solar and reduce carbon pollution, not fighting them.”
Virginia Attorney General Mark Herring’s Office of Consumer Counsel has also intervened in REC’s rate case. That office has not yet publicly indicated what position it will take. In 2014 the SCC rejected Appalachian Power’s proposal to nearly double its fixed monthly charge for Virginia customers.